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CoolWallet Pro Now Supports Terra (LUNA) and UST

Warning: The prices of Terra (LUNA) and USD Terra (UST) completely collapsed recently to nearly $0 after UST lost its peg to the US Dollar after a coordinated de-pegging attack. This highlights the risk that comes with algorithmic stablecoins. While there are tentative plans to revive Terra in a different format, their reserve has been wiped out and total coin supply severely diluted. As such, CoolWallet users are advised to not buy LUNA or UST due to their high risk and volatility.

CoolWallet Pro now has default support and compatibility with the stablecoin Terra (UST) and the ecosystem’s governance token LUNA. Although it’s easy to add custom tokens to our wallets already, default support brings icons and additional functionalities in our CoolWallet world. From now on, both Terra and LUNA will show up in the default lists of our CoolBitX Crypto app, while options to stake and perform other decentralized finance (DeFi) actions are on the way.

Source: Binance

What is Terra?

Terra LUNA, founded in 2018 by Daniel Shin and Do Kown, is a decentralized finance (DeFi) protocol running on the blockchain, existing to manage the algorithmic stablecoin UST. Stablecoins are used in the world of crypto to hold funds in digital assets less volatile than cryptocurrencies like Bitcoin or Ethereum. People can mint and stake UST, and they can also trade it for fiat or other cryptocurrencies. In the years since the founding of the Terra protocol, it has grown to support a number of dApps, such as the Anchor protocol, which allows users to stake their tokens for much higher yields than would be available at a bank.

How does an algorithmic stablecoin work?

As an algorithmic stablecoin, TerraUSD is different from collateralized stablecoins such as USDT and USDC, which are in theory backed with a 1:1 reserve of US dollars and other holdings in order to maintain their pegs. However, in reality, the details of the reserves behind collateralized stablecoins can be murky.

The mechanism that Terra LUNA uses to maintain its peg is to use two types of tokens: UST and LUNA. While UST is the stablecoin itself, LUNA is the governance token for the ecosystem. The way it works is that LUNA is staked in order to become a validator on the network and earn incentives. LUNA can also be burned to mint UST or fiat.

The idea is that the protocol creates arbitrage opportunities with the discrepancy between the price of LUNA and UST. When the latter costs $1.01 and the former is priced at $1.00, the validators are incentivized to burn LUNA to mint UST, balancing the UST back to $1.00 and maintaining the peg. Validators are also incentivized by the potential to earn transaction fees and through seigniorage, which is when the tiny profits the protocol derives from minting tokens get distributed to validators as well as to the protocol’s treasury.

About CoolWallet

As a pioneering hardware wallet brand that has focused on up-to-the-minute security solutions, as well as sleek designs since 2014, CoolWallet’s cold storage product line are unlike other cold storage products on the market, which tend to use much bulkier designs, often in the form of USB-style devices. Our extremely affordable CoolWallet S as well as our flagship CoolWallet Pro models both employ a credit card design and are featherlight and waterproof.

The wallets interoperate with mobile, both iOS and Android, over encrypted Bluetooth. No tedious wires are required – just stay within the 10m radius of the phone and all is possible. Biometric verification, a visual check through the e-ink display, as well as the push of a physical button are just some of the other measures we employ to make sure you are who you say you are when you try to access your CoolWallet device. CoolWallet offers the best of both security and convenience when it comes to cold storage, and with the Pro, you get incredible access to the best that the DeFi and NFT spaces have to offer.

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Terra's LUNA and UST Crash Down to Earth: What Happened?

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